The Toro Company Q3 FY2025 earnings call

• Adjusted earnings per share in the quarter were $1.24, exceeding expectations. • Professional segment grew 6% YOY with margins expanding 250 basis points. • AMP productivity program has delivered $75 million in annualized cost savings and is on track for $100 million by 2027. • Launched innovative products like GEOLink Mo autonomous fairway mower and new construction products. • Focus on operational excellence, cost control, and innovation in outdoor solutions.

Professional segment net sales for the third quarter were $931 million, up about 6% year-over-year, driven by higher shipments of underground construction and golf and grounds products and net price realization. Professional segment earnings were $199 million, up 20% year-over-year, resulting in an earnings margin of 21.3%, up from 18.8% in the prior year. Residential segment net sales for the third quarter were $193 million, down 28% year-over-year due to lower shipments and channel inventory issues. Residential segment earnings for the quarter were $4 million, or 1.9% of sales, compared to $33 million, or 12.2% of sales last year.

• Fiscal 2025 total company net sales expected at low end of flat to down 3% range. • Professional segment revenue expected up slightly; residential down mid-teens. • Adjusted gross margin expected to improve; adjusted operating earnings margin flat to slightly lower. • Adjusted diluted EPS expected at low end of prior range (~$4.15). • Interest expense ~$60M, cap ex ~$90M, free cash flow conversion ~110%.

• Persistent headwinds in residential segment due to homeowner demand issues. • Tariff impacts on costs. • Inventory management challenges in residential segment.

Q: How has the professional landscape channel related to consumer challenges?

A: The professional landscape business grew in Q3 due to strong contractor demand for new products like Exmark's Lazer Z, offsetting muted homeowner demand.

Q: What is the status of AMP program savings and potential for future increases?

A: AMP has delivered $75M annualized savings, with $47M realized in 2025. On track for $100M by 2027 and may expand further.

Q: What are lead times like for golf products and status of Spartan mower sales?

A: Golf product lead times are improving, closer to current than last year. Spartan mower sales are down due to lower homeowner demand post-acquisition.

Q: Discuss inventories and their alignment for 2026 selling season?

A: Residential inventory is improving, set up well for 2026 spring season. Underground and golf grounds making progress but still some work needed to align inventory with demand.